Don’t overlook the role of creating lifetime annuity income to support you in retirement
Annuity Income Announcements for Retirees
To get a better sense of annuity income changes for retirees, compare recent annuity income announcements from TIAA-CREF:
To learn more about annuity income, contact us.
As you get closer to retirement, you’ll need to ensure your income will support basic cost-of-living increases, particularly for healthcare, and set up a flow of income payments that can withstand market fluctuations. As average life expectancy continues to increase, your income will need to last for as long as 20 to 30 years – perhaps more. That’s why you should understand how to incorporate creating lifetime income from an annuity in your retirement planning.*
How Lifetime Annuity Income Works
When you have money in an annuity, such as the annuity accounts in a retirement plan, you can receive cash withdrawals, annuity income payments, or a combination when you retire. If you choose annuity income payments, you’re opting to pool your assets with others and receive income for as long as you live. An insurance company, such as TIAA, administers the pool using the assets of those who live shorter than expected to provide income for those who live longer than expected.
Two Primary Types of Annuity Income – Guaranteed and Variable
With fixed or guaranteed annuities, funds are invested in the insurance company’s general account, which typically contains fixed-income securities like bonds. The issuer, not the contract owner, assumes all investment risk. Fixed annuities offer a guaranteed payment, with the payout amount based on the assumed future returns of the investments and the annuitant’s life expectancy. All guarantees are based upon the claims-paying ability of the insurance company. The payment can be fixed for life or can allow for future increases. These types of payments can help ensure you’ll have enough to pay for daily living expenses. To learn more about annuity income, view steps to take to build a guaranteed income stream for life.
Variable annuities provide the contract owner with the ability to invest in both fixed-income and stock-based accounts whose values change depending on the performance of the underlying investments. While variable annuities offer the potential for higher long-term returns than fixed annuities, their payouts can fluctuate (sometimes dramatically) from year to year. Unlike a fixed annuity, the variable annuity contract owner assumes all investment risk, including the loss of principal. Past performance does not guarantee future results.
Annuity Income Options Available to You
With annuity income payments, you can choose to receive income for the life of one or two individuals. You can also elect a lifetime payout option that guarantees payments will continue for a minimum period (such as 10, 15 or 20 years).
To learn which type of annuity and income option makes the most sense for you, consider four steps to selecting an annuity.
Projecting the Amount of Guaranteed Income You’ll Need
To know how much guaranteed lifetime annuity income you’ll need to support basic cost-of-living expenses, speak with an experienced financial consultant who can show you different scenarios. These scenarios are based on information you provide about when you want to retire and how you want to receive income. Additional assumptions, such as different expected rates of return, are included to generate the estimates, tables, and graphs.
All of this information is part of an in-depth retirement illustrations report that is sent to you at no additional cost. The report will help you determine the amount of monthly income you might receive from a lifetime annuity and compare this with other options, such as taking systematic withdrawals. By understanding how much lifetime annuity income you may need, you’ll be better prepared to address your financial needs as you get closer to retirement.
To learn more about annuity income, contact us.
*All guarantees subject to the issuer's claims-paying ability.
Any guarantees under annuities issued by TIAA are subject to TIAA's claims-paying ability. Payments from variable accounts will fluctuate based on investment performance.
TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature or visit tiaa-cref.org for details.
Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity and may lose value.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY.